November 01, 2011
Update from Australia: Direct Selling Association of Australia
by John Holloway
Our membership includes more than 70 companies bringing a wide range of consumer products to the Australian market through direct selling. Almost 40 per cent of these are controlled by foreign interests. Sixty per cent are small or medium enterprises that, in a costly and concentrated retail environment, see the opportunity in the direct selling channel.
Independent research has members’ retail sales at $A1.6 billion and almost half a million Australians engaged in distributing their products. Like other markets, distributor motivation lies variously between seriously minded business people and hobbyists.
We estimate if food and services are excluded our members could account for 1.5 per cent of Australia’s retail spend. This of course doesn’t include the performance of non-members operating traditional direct selling models and others with elements of direct selling in their business models. Without official data the true size of our direct selling industry is therefore not known.
Updated research later this year is likely to confirm anecdotal evidence that Australia’s recent performance, while outperforming mainstream retail, has been patchy. There is little doubt that, even though Australia fared well during and since the global financial crisis, direct selling has been affected by reduced consumer spending.
The Association is midway through a process of renewal. Key to this has been building a stronger capacity through systems and people to anticipate and manage the economic, social and environmental challenges that inevitably reach direct selling. We continue to build and renew relationships with governments at political, policy and regulatory levels, and with kindred bodies, media and interests groups.
Through a member committee we are focused on building our value proposition to a diverse membership through promotional, networking and day-to-day business assistance, particularly for smaller members. Important in this has been the launch of a legal compliance and risk management guide and a well-received, resource rich and highly interactive website, an essential tool for smaller associations.
Early next year our members will be considering new governance standards for the Association, including modernised constitutional arrangements and upgraded ethical business practices based on a globally inspired and locally adapted Code of Practice.
Undoubtedly our major challenge over the past 18 months has been the new Australian Consumer Law (ACL). Developed through a federated governmental system, it replaces more than 20 pieces of consumer legislation.
The benefit in this for nationally operating businesses is obvious, provided it is the right law. For the most part the ACL is welcomed and supported by the industry. Its definition and treatment of unsolicited selling is not. It is highly prescriptive, ill-defined and shows little understanding or acceptance of modern direct selling models that increasingly integrate traditional network marketing, party plan and doorstop selling methods and converge with other retailing, particularly distance selling. The challenge for members lies most glaringly in managing demands such as training and logistics from regulated and unregulated activity in a single business model.
Some aspects of the new law are unprecedented in international regulatory policy—for instance, a blanket prohibition on supplying and accepting payment for products during cooling-off periods. Some governments, regulators and interest bodies seem unwilling to accept that the inimical practice in some direct selling is not present in members’ business models. The Association continues its quest for concessions to ensure minimum disruption to members and their distributors in implementing the new law.
In an environment of continuing drift from employment to independent contracting and of the re-emergence of dated labour laws, the Association remains ever vigilant to social and economic policy objectives that threaten the independence of the sales force. Another challenge lies in the mooted application of privacy regulation to our sales force, which currently enjoys a justified exemption.
In spite of this, direct selling has a bright future in Australia, particularly in the personal care and complementary healthcare markets. And why shouldn’t it, with its quality products, evolving business models, distributors with the product knowledge, trust and service often lacking in mainstream retail and its appetite for social media, the natural networking tool? The imagination and commitment that has established our industry will assure its future.
John Holloway is the Executive Director of the Direct Selling Association of Australia.